[LONDON] After the biggest swoon in gold futures prices in almost three years, the market steadied.

Gold futures for December delivery slipped 0.1 per cent to US$1,268.60 an ounce at 1:46pm on the Comex in New York, after slumping 3.3 per cent on Tuesday. Prices are down 7.9 per cent since a July peak as expectations for tighter monetary policy in Europe and the US dent the appeal of the metal.

"The gold bull has been given a good scare," Adam Finn, who oversees precious metals at Triland Metals and was short gold, said by phone from London. "It's not dead yet. We could drop down to US$1,172 and still see a medium-term continuation of the move higher."

Some forecasters said it may get worse before it gets better. Prices will likely bottom at US$1,257 an ounce, said Georgette Boele, a strategist at ABN Amro Bank NV in Amsterdam and last quarter's second-most accurate gold forecaster tracked by Bloomberg.

Gold retreated on Tuesday following hawkish comments from Federal Reserve Bank of Cleveland president Loretta Mester and her counterpart from the Richmond Fed, Jeffrey Lacker. An informal consensus has built among European Central Bank policy makers in the past month that asset buying will have to be tapered once a decision is taken to end the program, the officials said, according to euro-zone central-bank officials.

Risks related to the US presidential election in November and Britain's talks to leave the European Union may boost gold's role as a haven, said Barnabas Gan, an economist at Oversea-Chinese Banking Corp in Singapore. He was the most accurate forecaster of the metal in the third quarter, according to data compiled by Bloomberg.

"As quickly as gold fell, as quickly gold could rally back," Mr Gan wrote in a report. "Weak inflationary pressures may once again lift gold prices back to their previous shine."

A gauge of 14 senior gold producers tracked by Bloomberg Intelligence extended losses, with Sibanye Gold Ltd tumbling 7.6 per cent. The index has slipped 10 per cent this week.

Despite the selloff in gold prices, investors are holding onto exchange-traded funds. Assets climbed 3.1 metric tons to 2,036.5 tons on Tuesday, near the highest since 2013, data compiled by Bloomberg show.

Online trading platform BullionVault said trading on Tuesday was the heaviest since June 24, the day after UK voters chose to leave the European Union. Gold buyers outnumbered sellers 7 to 1 on Tuesday, the company said.

In other precious metals: Silver futures declined on the Comex, while platinum and palladium slid on the New York Mercantile Exchange.

BLOOMBERG